What was the deferred license revenue for Benihana in 2023?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
| December 31, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| Deferred license revenue (1) | 218 | 297 |
| Deferred gift card revenue (2) | 1,716 | 1,680 |
| Advanced party deposits (2) | 361 | 435 |
| Konavore rewards program (3) | 177 | 163 |
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the deferred license revenue as of December 31, 2023, was $218,000. This figure represents the revenue that Benihana has received but not yet recognized as earned, related to licensing agreements. This deferred revenue is a liability on Benihana's balance sheet, as they have an obligation to provide future services or fulfill other requirements to earn this revenue.
The FDD also provides a breakdown of when Benihana expects to recognize this deferred license revenue. For the year 2024, Benihana estimated deferred license revenue to be $45,000, for 2025 it is $44,000, for 2026 it is $37,000, for 2027 it is $34,000, and for years thereafter it is $59,000. The total future estimated deferred license revenue is $297,000.
Deferred revenue is a common accounting practice, especially in franchise systems where initial fees are collected upfront but the services or rights extend over a period of time. For a potential Benihana franchisee, understanding deferred revenue can provide insight into the financial obligations and future revenue recognition of the company. It's also worth noting that the revenue recognized from deferred license revenue for the year 2023 was $79,000.